No visible results of “economic modernization on the Medvedev track”

Valdai Club.com interview with Sergey Aleksashenko, Macroeconomic Research Director of the National Research University – Higher School of Economics.

Can we expect an economic breakthrough if Vladimir Putin wins the 2012 election?

I don’t. I think Prime Minister Putin has clearly formulated his economic views, which are limited to strengthening the role of the state in the economy, suppressing competition and refusing to undertake consistent efforts to improve the investment climate in the country, and he has been implementing this approach systematically. Of course, I would like to hope that the phrase “Never say never” will apply to my answer, but I don’t see any reason to hope.

Russia has been trying to ease its oil dependence for decades. Will it succeed in the next decade, or will this disease continue under a new president?

I don’t agree that Russia has been trying to ease its oil dependence. In my view, this dependence has become even stronger in the last five years. It will take 25-30 years and strong political will for modernization – that is, to turn Russia into a 21st century nation – to ease this dependence, but I don’t see any such will among our leadership.

Dmitry Medvedev focused on economic modernization during his presidency. Are there any practical results to account for these efforts? Will this policy be continued under Putin?

There are no visible results of “economic modernization on the Medvedev track.” In principle, it is a mistaken premise to expect modernization to be initiated from the top. Furthermore, a modern economy cannot develop in Russia without reforming its political institutions, such as the elections, the courts and the law enforcement agencies.

During his terms as president and prime minister, Vladimir Putin has highlighted economic cooperation with the CIS states. Will he continue to pursue this foreign economic policy?

Yes, I think he will. No, I suspect that economic integration with our closest neighbors will not ensure any economic benefits for Russia. We need foreign investment, technology, management and skills, which the CIS countries cannot provide. The CIS countries will eventually feel these advantages because their enterprises will have free access to the Russian market, but Russia pursues this policy for its political image.

Could Putin change the direction of the Russian economy toward the Asia Pacific region?

Yes, but not considerably. Russia supplies raw materials to the rest of the world. In principle, it can sell most of them to Europe or Asia – the difference for the economy is insignificant.

Do you think the Jackson-Vanik amendment will be abolished in 2012? Will this influence Russia’s accession to the WTO?

Yes, the amendment will be abolished immediately upon Russia’s entry into the WTO. The accession agreement will be signed on December 15 this year, and all accession procedures should be completed by mid-2012.

Sergey Aleksashenko - Macroeconomic Research Director of the National Research University – Higher School of Economics.